While dumping government bonds, Gross boosted his holdings of short-term cash securities to 23% of the fund from 5% in January.

The rest of the portfolio is diversified among mortgage bonds, corporate debt, foreign bonds and municipal securities. The fund is up 0.8% year-to-date, beating 74% of its peer funds, according to Bloomberg News data.

In his monthly commentary on Pimco’s website last week, Gross said that Treasury bond yields were artificially depressed by as much as 1.5 percentage points because of the Federal Reserve’s bond-buying program known as quantitative easing. The Fed in November committed to buying $600 billion of Treasuries in the market through midyear in an attempt to suppress longer-term interest rates and bolster the economy.

“Many critics ... including yours truly, would wonder whether quantitative easing policies actually heal, as opposed to cover up, symptoms of an unhealthy economy,” Gross wrote in his commentary. “They might at the same time ask simplistically whether it is possible to cure a debt crisis with more debt.”

Noting that the Fed’s purchase commitment ends in June, Gross wrote:

Who will buy Treasuries when the Fed doesn’t? I don’t know. Reserve surplus sovereigns [foreign-government investment funds] are likely good for their standard $500 billion annually, but the banks are now making loans instead of buying Treasuries, and bond funds are not receiving generous inflows like they were as late as November of 2010. Who's left? Well, let me not go too far. Temporary voids in demand are not exactly a buyers' strike. Someone will buy them, and we at Pimco may even be among them. The question really is at what yield and what are the price repercussions if the adjustments are significant.

Treasury bond yields rose sharply in early February, a move that analysts at the time said was triggered by growing expectations that the economy was gaining momentum. The five-year T-note yield surged from 1.92% on Jan. 28 to 2.40% by Feb. 8.

But yields have since declined again, helped in part by classic "flight to safety" buying by some investors as unrest in the Middle East and North Africa has escalated. The five-year T-note yield was at 2.13% on Wednesday.